Centre
asks states to start fiscal reforms
Patna, April 7
The Union government has pressed hard the panic button over the fast deteriorating fiscal health of the Centre and the states. In order to put a lid on it, the Union Finance Ministry has embarked on an impressive fiscal reform plan for the year 2000-01 to 2004-05.

Textile ministers’ meeting convenedNew Delhi, April 7
Textiles Minister Kashiram Rana, has convened a meeting of state Textile Ministers and Secretaries here on April 10 to draw a strategy for the sector in the changing international business scenario.

Mittal richest Asian in UKLondon, April 7
Metal magnate Lakshmi Mittal, who lost a billion pound in the past one year owing to declining values in the steel sector, remains the richest Asian in Britain with a fortune worth £ 1.2 billion, the 2001 edition of Britain’s Richest Asian 200 announced today.

Policy on holidays demandedBangalore, April 7
All India Bank Officers’ Confederation (AIBOC) said today a national policy on general holidays should be evolved in consultation with all the unions.

The Greater Fools Theory is backThe so called New Bull will hopefully be retained where he deserves to be, unlike the erstwhile so called Big Bull, who unfortunately, has been roaming scot-free, let us take flashbacks in time to review what we had opined on these contemporary topics a year ago.

Need to form consumer product safety
panelFor the last six months, the government has been repeatedly assuring the Indian industry that it will take all necessary measures to protect them and ensure that imports do not enjoy any unfair advantage over domestically produced goods. Fair enough. But I wish the government would look at consumer concerns too. And that would mean putting in place new laws and enforcing the existing ones meant to protect consumers.

US firms to use Indian softwareNew York, April 7
US information technology companies are likely to increasingly use services of Indian software companies in the wake of tax cut proposals in their budget and an underlying pressure to seek less expensive alternatives to prices quoted by local outfits.

New Delhi, April 7
The Department of Telecom, which has come under fire from industry and political circles, has cleared 48 applications for basis service providers.

The government’s move comes in the wake of recent letter to the Prime Minister by Chief Ministers and MP, seeking the intervention of Mr Atal Behari Vajpayee in speeding up the process of allotment of licences to basic operators.

The government had committed to issuing licences within 15 days of submitting applications. So far, the government has issued only letter of intent to 40 of the 147 applicants, they said.

The telecom major Bharti Enterprises was the latest to get its application cleared for basic services in eight circles.

Last week, letter of intent was cleared to Reliance, HFCL and Tatas.

The chief ministers and MPs in heir letter also requested the Prime Minister to allocate 5 Mhz of spectrum to the basic operators.

They said basic services was crucial to the rollout of telecom services in their respective states and that a delay
would hamper their plans.

UNI adds: “The cellular industry believes that this propoganda is yet another attempt in the continuing saga of using half truths, misrepresentation of facts and out of context’’, a coai statement today said.

While the Videsh Sanchar Nigam Ltd.
(VSNL), Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd.
(MTNL) may not be allowed to bid for the fourth cellular licence in the four metros and 17 telecom circles.

The stringent norms laid down in the guidelines for issuing the fourth cellular licences by DoT may prevent these public sector undertakings from bidding.

As per the guidelines, “a promoter company cannot have stakes in more than one bidder company for the same service circle”. In other words, to provide a level playing field for the private operators, all existing licence holders, including the
PSUS will not be allowed to bid for those circles where they already have a stake. Since all the three
PSUS have a common promoter — the government, this could land them in trouble.

The whole issue is being examined carefully. It is yet to be decided whether the three
PSUS can be allowed to bid or not. But all efforts will be made to apply the rules equally to the private sector and the
PSUS. Especially with disinvestment in vsnl due, it could face legal hurdles.

At present, both
BSNL and MTNL hold the third cellular licences, while vsnl is yet to take a decision on entering the field.

MTNL
is the third licence holder in the metros of Delhi and Mumbai, while BSNL
hold the licence in the remaining circles. Vsnl, on the other hand, is undertaking financial viability studies for bidding for the fourth cellular licence.

If the guidelines are strictly enforced, vsnl may find itself out of the race as also
BSNL and MTNL, they said.

The DoT in March had invited bids for award of licences to the fourth operator for cellular mobile service. The existing vacant slots of Andaman and Nicobar and West Bengal circles too are sought to be filled up.

Patna, April 7
The Union government has pressed hard the panic button over the fast deteriorating fiscal health of the Centre and the states. In order to put a lid on it, the Union Finance Ministry has embarked on an impressive fiscal reform plan for the year 2000-01 to 2004-05.

The Union Expenditure Secretary, Ministry of Finance, in his urgent letter to all the Chief Secretaries of the states has asked them to draw up a Medium Term Fiscal Reforms Programme (MTFRP), in pursuance of the recommendations of the Eleventh Finance Commission (EFC) to improve the fiscal health of the respective states.

As part of the collective effort of the states and Centre and EFC’s recommendation to work out a fiscal reform mode, the central government has set up an Incentive Fund (IF) to facilitate and speed up the reforms.

The IF shall have a corpus fund of a total of Rs 10,607.72 crore for the period of five years (2000-01 to 2004-05).

The Union Ministry of Finance has instructed all the states to draw up their MTFRPs according to their own regional and social uniqueness and after that the states and Centre would discuss it before entering a MOU. After the MOU is finalized the finance-facility from the Incentive Fund would be triggered off to the states.

The states have been provided the detailed scheme that comprises information about the criteria for availing assistance from the IF. The monitoring of the reform programme, the letter to the chief secretary says, “will be a joint and collaborative exercise between the Centre and states”.

The Finance Ministry in its letter to the states has expressed great concern over the rising Gross Fiscal Deficit (GFD) to the GDP ratio of the states, Revenue Deficit and mounting Debt-Interest liability in the decade 1990-2000.

The Ministry has shown dismal picture of the states’ finances and its management, maintaining that the Revenue Deficit of the states as percentage of the Gross State Domestic Product (GSDP) in 1993-94 was -0.53 that has risen up to -3.57 in 1999-2000. Similarly, the figures for the GFD as percentage of GSDP, for the same corresponding period were -2.80 and -5.78 respectively. Debts as percentage of (GSDP) were pegged at 22.20 in 1993-94 that rose up to 25.87 in 1999-2000, altogether an alarming scenario.

Composition of the Incentive Fund: The EFC had suggested in its report that 15 per cent of the grants to meet the revenue deficit of the states, that the states are entitled to get otherwise, might be withheld and linked to ‘performance and progress’ in the fiscal reforms carried forward by the state.

The EFC provided that the Incentive Fund would constitute of two parts. First will be the 15 percent of the ‘withheld part’ of the revenue deficit grants to the states and the second part would be the matching amount, equivalent to the first part, provided by the central government. The corpus fund works out to be Rs. 10,607.72 crore.

At the end of the stipulated five years, the remaining fund, if any, would lapse to the central government. “The central government may also consider the fiscal reforms program linked assistance by way of Extended Ways and Means Advance and additional market borrowings”, the letter from Finance Ministry says.

New Delhi, April 7
Textiles Minister Kashiram Rana, has convened a meeting of state Textile Ministers and Secretaries here on April 10 to draw a strategy for the sector in the changing international business scenario.

The conference assumes importance in view of the fact that the textile sector is facing a serious challenge due to the gradual accelerated phasing out of tariff barriers as a result of the setting up of the WTO.

Further the agreement on textiles and clothing will result in the culmination of the quota regime on December 31, 2004 and as such the impact of the global trade regime would be severe due to an increased availability of foreign textiles at competitive rates.

The removal of quantitative restrictions on imports, together with the lowering of duties, has effectively shifted the deadline even closer.

A major part of the conference is expected to be devoted to the reforms necessary at the State level to prepare the industry for the post MFA challenges.

Other major issues concerning State level reforms which are expected to draw the attention of the conference are: availability of power and tariffs, the issue of
taxes, infrastructure support, creating a labour productive environment and liberalising marketing regulations.

The conference would also deliberate on how to take advantage of the opportunities arising out of WTO and changing textiles scenario in the world. The agenda for strengthening the industry would include investments for growth, rapid technological upgradation and a strong thrust to exports.

London, April 7
Metal magnate Lakshmi Mittal, who lost a billion pound in the past one year owing to declining values in the steel sector, remains the richest Asian in Britain with a fortune worth £ 1.2 billion, the 2001 edition of Britain’s Richest Asian 200 announced today.

The Hinduja brothers, who claimed top spot in 1999, saw a meltdown in their high-tech stocks in India and are now estimated to be worth about £ 800 million — down £ 1,200 million during last one year.

Valuation of the riches also varied widely between two reports published today.

While the richest Asian 200 list brought out by the Eastern Eye, a weekly, put Lakshmi Mittal’s fortune at £ 1,200 million, the 2001 rich list brought out by Asian Xpress, a new Asian weekly, said Mittal is worth £ 1,000 million.

Bangalore, April 7
All India Bank Officers’ Confederation (AIBOC) said today a national policy on general holidays should be evolved in consultation with all the unions.

AIBOC
is willing for a national debate for evolving consensus in this regard, Shantha Raju, President
AIBOC said in a statement here today.

One of the “irritants” in the Industrial Relations in the Banking Industry is “frequent interference” of
RBI and government in the matter of working on holidays and Sundays, he pointed out.

The general holidays are declared as per the Central/State government policy and declared under the Negotiable Instruments Act which takes care of requirements of all sections of the society, Shantha Raju said.

Such holidays are not only declared in case of banks but also in case of other sectors including government offices.

Therefore, singling out only bank employees for the purpose of working on holidays is bound to create serious disturbances in the banking industry, he said.

Further, the officers are required to work without any compensation since they do not come under the Shops and Establishments Act, whereas the workmen staff are entitled for overtime wages, Raju said.

He called for a “fair and equitable compensation system” when the officers are directed to work on holidays.
PTI

Patiala, April 7
The Sugarfed Punjab sent a proposal to the Planning Commission of India to set up a Sugarcane Research Institute in Punjab.

Disclosing this, Mr Jagjit Puri, Managing Director said that a 27 acres of land near Banur has also been decided as the place for the setting up the project. He was addressing the mill workers and farmers during a function held here today.

Mr Puri said that a sugar mill can run for a maximum of 150 days in a year while some others complete their work even within 90 days. He said that for the first time, the sugar prepared this year would be even transported to foreign countries. Mr Puri also added, that the Punjab authorities will install electricity producing plants with the help of the Sugarfed to enable to run their mills throughout the year.

Mr Puri said that 9 megawatt electricity would be produced in Nawanshahr. He said that a 50-member committee was formed for the better improvement of sugar mills. He added that this year, international level sugar worth Rs one lakh would be produced in the Nawashahr which will come into the market the very next week. He said that 29 lakh quintals of sugar has already been produced in the state this year. He added that a meeting would commence on April 12 at Chandigarh to hear the demands of the associated mill workers.

Zydus Cadila and Unichem Laboratories have entered into an agreement to manufacture and market locally two Zydus Cadila drugs in the anti-diabetic and cardiovascular segments. Domestic pharma companies seem to have identified co-marketing as an easier way to sell formulations across the country as setting up of marketing network requires big investments’. ‘Co-optition’ seems to be the future of this industry!!!

Castrol India

The UK-based lubricant major has shut its Hosakote plant in Karnataka. Castrol has also announced a voluntary retirement scheme for the employees of the plant. The plant has been shut as it was found to be commercially unviable, as compared with two other plants situated at Chennai and Mumbai. Over the years, the lube industry in India has become extremely competitive and there has also been an increase in the input cost of raw material, so, actually this fallout was inevitable.

M & M

The company has tied up with Renault to provide petrol engines for its project Scorpio Multi-Utility Vehicle (MUVs) models; commercial production of these engines are expected to begin before the year-end. Scorpio is to spearhead Mahindra’s entry into the manufacture of the next generation of vehicles and would eventually become the platform for all of its MUVs. The company has already invested over Rs 500 crore in the project. R&D is always a wise investment (provided you get returns)!!!

Cholamandalam

This wholly owned subsidiary of Cholamandalam Investment and Finance Company is planning to offer a wide range of loan and gilt products to its customers. It has already signed memoranda of understanding with IDBI and HDFC to distribute their loan products and is holding talks with PNB and SBI for the gilt products. Looks like the company is all prepared to spread its
‘empire’!!!

The so called New Bull will hopefully be retained where he deserves to be, unlike the erstwhile so called Big Bull, who unfortunately, has been roaming scot-free, let us take flashbacks in time to review what we had opined on these contemporary topics a year ago.

Whatever happened to all those predictions of the Sensex becoming 20,000 within two years? As I have never tired of repeating over and over again — there are two factors that drive a market — greed and fear. As the Sensex surged towards 6000 raw greed was the order of the day and fear went out of the window. But the fear factor has returned and how? Today, investors who had blindly walked into the much touted tech funds and other high-flying mutual funds have no clue as to what hit them, which brings us back to the good old Greater Fools Theory.

For those who came in late — The Greater Fools Theory when fine-tuned to the Indian context suggests that at the Sensex level of 3,500 points the small investors stayed away swearing that he remembered the beating he had taken while investing in equities in the past, at 4,000 he was sceptical saying that he had seen it all happen before, at 4,500 he said — hey, wait a minute, at 5,000 he said — maybe, just maybe, I should invest, at 5,500 he decided he will invest, at 6,000 he jumps into the fray and hey presto ! No prizes for guessing what
happened thereafter !

The small investor is now left wondering why at all he forayed into the market. Sad but true is the fact that it is the retail investor who is the inevitable greater fool who walks in at the end of the rally and is left holding dead-stock. There is also an extention of this theory — The New Fools Theory which suggests that a new set of fools are always around at the end of every rally to pick up the stocks that are being unloaded by the very same people who precipitated the rally in the first place.

Many legends were being spun around the so called New Bull whose prowess in the stockmarket was being bandied about in a manner reminiscent of the euphoria that surrounded the so called erstwhile Big Bull in the early nineties. The stockmarket, it must be understood is a zero-sum game for operators and traders alike and the fact remains that — no matter how smart you
are there is always somebody smarter than you. The New Bull has found this out the hard way and if the market buzz is to be believed, at least half the obscenely large sum of money he had earned through market manipulations over the past six months has been lost in just six post-budget trading sessions. The buzz is that he walked into a bear trap set by a veteran BSE broker and the market is now tottering because of the ongoing bloodbath between the two.

LABOUR
LAWS

by Praful R.
Desai

Deduction of contributions

Q: Whether the E I Court and the HC were justified in upsetting the order imposing damages for not making the ESI contributions in time or not?

Appellant submits that the Regional Director had taken into consideration the explanation offered by the respondent in the matter of delayed contributions such as the unit being sick, labour unrest which resulted in a lock-out and its closure ultimately and, thereafter, computed the damages payable and each one of the reasons given by the respondent stood rejected.

However, the EI Court looked into each of these aspects and ultimately held that the reasons given by the respondent are good and sufficient and fell within the scope of the decision in Regional Director, ESI Corporation v Sakthi Tiles (1994-III-LLJ (Suppl)-1197) and thereafter, gave the relief. The SC, as did the HC, the ES Court gave cogent reasons to make the order in detail.

It was, however, submitted that the EI Court had not taken note of the fact that the employee’s part of the contribution had also not been remitted and, therefore, to that extent damages should have been imposed against the respondent.

On this aspect, the EI Court has noticed that the respondent has not deducted any amount from the wages of the employees for running the business though as per records contributions shown have been deducted and it was only in the nature of book adjustment.

In the face of this finding on fact, the SC held that it is not
proper to interfere and it felt there is no substance in the contention advanced on behalf of the appellant. With the result, the present appeal was
dismissed.

For the last six months, the government has been repeatedly assuring the Indian industry that it will take all necessary measures to protect them and ensure that imports do not enjoy any unfair advantage over domestically produced goods. Fair enough. But I wish the government would look at consumer concerns too. And that would mean putting in place new laws and enforcing the existing ones meant to protect consumers.

Certainly, the lifting of all quantitative restrictions on imports is good for the Indian consumer. They would enjoy more variety, more choice. It would also force the domestic industry to become more competitive in respect of quality and price. It would also teach the Indian industry not to take the consumers for granted. But all this will happen over a period of time and not immediately. Because firstly, the imports are not large enough to make such an impact.

Secondly, barring imports from China, most imported goods are far too expensive and out of the reach of most consumers. Today, the market may boast of fruit juices from Australia, readymade garments from Taiwan and Singapore, chinaware from Japan, glasses from Belgium, but like the burgundy red apples from New Zealand priced at Rs 100 a kg many of them are far too expensive to create a large demand in the market.

However, in the years to come, imports will certainly increase and if we are not careful, not all of them will be of good quality or safe. That’s why we need to immediately have in place, adequate safeguards to protect the interests of consumers. Several factors peculiar to India make this absolutely imperative: (a) a majority of Indian consumers are uneducated, unaware of their rights and therefore highly vulnerable. (b) the market is highly price sensitive and the consumers, particularly in view of their lack of awareness about quality, may be tempted by sub-standard goods if they are really cheap. (c) We do not have adequate consumer protection laws and even those that are in existence are poorly enforced. (d) we also do not have a product liability law.

So what needs to be done? The government should immediately constitute, under the Consumer Affairs Ministry, a committee of experts to look at all our laws and bring them up to date with international laws in the area of consumer protection. Or else, those goods that are rejected in say Europe or North America may well find a place here. Besides preventing India from becoming a dumping ground for rejects from other countries, such laws would also ensure that the domestic industry too produces better quality goods at competitive rates. We also need to constitute an independent consumer product safety commission to protect consumers from all unsafe goods marketed here.

Secondly, we need to immediately overhaul the system of enforcement of consumer protection laws in the country and apply them stringently to both domestically produced goods as well as imports. The system of enforcement should also become transparent so as to eliminate corruption. Today, there are a number of laws, rules and orders, that govern the sale of agricultural produce, food products, processed foods, drugs and cosmetics besides various essential household goods. These are all meant to protect consumers, but their enforcement has always been slack and it is now being reflected in the imports too.

Under the Weights and Measures (Packaged Commodities) Rules, for example, all packed goods should mention the full name and address of the Manufacturer and in case of imports, the name and address of the importer or the distributor and also the retail price inclusive of all taxes. Yet, you can find any number of imported goods which violate the rules.

Similarly, as many as 133 different goods sold in the country, including food colours, cement, general service electric lamps, three pin plugs and sockets, switches for domestic purposes, infant milk foods, have to carry the ISI quality seal issued by the Bureau of Indian Standards. Yet, food colours and cement from outside the country have found their way to the Indian markets without the quality seal.

The role of enforcement agencies become even more crucial in respect of agricultural produce and processed foods. While buying a pack of processed food, for example, a consumer can check whether the manufacturer is complying with the mandatory requirement of mentioning the date of manufacture and the best before date. But the consumer has no way of knowing, by merely looking at the package, whether the manufacturer has used only the permitted additives or whether the levels of toxic heavy metals or pesticide residues, if any, are within the limit specified under the law.

The government is slowly waking up to the need for enforcing these laws in respect of imported goods too, but not out of concern for consumers, but in order to provide a level playing field to the domestic manufacturers. It’s time the government realised that Indian consumers too need to be protected.

New York, April 7
US information technology companies are likely to increasingly use services of Indian software companies in the wake of tax cut proposals in their budget and an underlying pressure to seek less expensive alternatives to prices quoted by local outfits. “We maintain our intermediate term positive recommendations on the Indian software service sector,” leading global financial firm Merrill Lynch said in an analytical report released yesterday.

“While seeking 25 per cent to 40 per cent cut in the prices charged by local software companies, American customers are threatening to use Indian software development companies as viable alternatives,” it said.
PTI

New York, April 7
General Electric Co.’s outgoing Chairman and Chief Executive Jack Welch sees layoffs on the horizon at the corporate giant, and warned that the weakening economy has yet to be hit by the recent wave of job cuts, he said in a television interview that aired late yesterday. “The unemployment rate is still running in the low fours, and yet what do you pick up the paper and read every day: layoffs, layoffs, layoffs,’’ he said in an interview on Cable News Network CNBC. “And that hasn’t hit yet.’’ Asked if GE has seen the end of layoffs, he said, “There’s no way that’s true.’’ “We got more layoffs from integration ... when we close Honeywell,’’ he said, referring to the company’s pending acquisition of the diversified manufacturer. “We have layoffs from the economy in many of our short-cycle businesses, and we have layoffs from improvements in digitization.’’
Reuters

Chicago, April 7
Motorola Inc denied a published report that it was facing serious liquidity problems after shares of the company’s stock fell to their lowest level in eight years. “Motorola today is financially sound. Any suggestion or erroneous report that Motorola faces a serious liquidity problem is simply not correct and is not supported by fact,’’ said Bob Growney, Motorola President and Chief Operating Officer, in a news release yesterday. This is the second time within a week that a major telecommunications equipment firm came out to reassure investors about its financial state. On Wednesday, Lucent Technologies Inc was forced to issue a statement denying bankruptcy rumours after its shares fell to a lifetime low.
Reuters

Paris, April 7
An attorney for the families of most of the victims of last July’s crash of an Air France Concorde has denied reports that the carrier’s insurers and the relatives had reached an agreement on compensation payments. In a telephone interview late last night with DPA, the German Attorney Ronald Schmid said: “The first concrete offer for compensation is now on the table.’’ The numbers must now be checked for each individual case, Schmid said, and the relatives would then decide whether or not to accept the offer. Of the 113 people who died in the Paris accident, 96 were German nationals travelling to New York. Earlier news reports citing a lawyer for the insurers indicated a compensation agreement had been reached. Neither Schmid nor other attorneys disclosed the level of the cash payouts or other details of the offer.
DPA

Radient portalNew Delhi, April 7An encyclopaedic portal whoswhoindian.com has been launched by Kolkata based Radient Advertising and Marketing Private Limited. The portal is oriented towards India and Indians and can be used as a point of reference across a band of more than 150 subjects.
TNS

Ball MusicoChandigarh, April 7Golden Ball Musico , a music company was launched by Dr Tripat Singh , here today. The company , which has exclusive rights for sale of various Osho cassettes, has brought out cassettes relating to healing through music, educational cassettes for children with nursery rhymes, panchtantra tales etc and also meditation techniques, reiki and sidhiyan. Dr Singh claims to have treated several people across the country through this natural healing course.
TNS

Hydrocracker unitAgra, April 7Mathura Refinery has commissioned a Rs 1040 crore hydrocracker unit to help reduce the sulphur dioxide content in its effluents with a view to control air pollution. Mr P.K. Biswas, Executive Director of the refinery, said that the hydrocracker unit, used high pressure to convert vacuum gas to value added middle distillates.
PTI